OIL AND GAS

BLM permitting times 'very long,' accountability lacking -- IG

Phil Taylor, E&E reporter

Greenwire: Tuesday, July 1, 2014

The Bureau of Land Management rarely sets deadlines for approving oil and gas drilling permits on public lands, and its employees often lack the supervision needed to ensure permits are approved on time, according to a new Interior inspector general report.

In addition, BLM's database for oil and gas permitting is riddled with errors, holes and inconsistencies, which complicates efforts to monitor performance at field office and national levels, the IG report said.

However, BLM's permitting regime is also hampered by factors outside its control: BLM has a shoestring budget and must manage lands for multiple uses; drilling operators often submit incomplete applications; and a 2005 law designed to expedite BLM permitting times lacks the flexibility to allow it to respond to changing industry demand, the IG said.

The result is that BLM in 2012 took an average of 228 calendar days to approve each drilling permit, nearly three times as long as state regulators say they take to approve wells, according to the IG.

"Review times are very long," the IG report said. "Although oil and gas operators share responsibility for this situation, inefficiencies in the government's review process impede productivity."

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BLM Director Neil Kornze said he agreed with many of the report's findings and recommendations, but he criticized the IG for failing to acknowledge BLM's limited budget and its mandate to support not just oil and gas permitting but also inspections, as well as grazing, recreation, hunting and wildlife habitat on its 250 million acres of public lands.

"The analysis presented in the draft report is narrowly focused," he said in a May 9 letter to Assistant Inspector General Kimberly Elmore. "We believe the report would be more helpful to the public if it addressed the complexities and challenges that the BLM faces as it manages an environmentally responsible oil and gas program."

BLM's oil and gas permitting times have been debated endlessly on Capitol Hill.

House Republicans last week passed a bill giving BLM no more than two months to approve or deny a well. Republican and industry critics say federal permitting delays have caused oil and gas production on the federal estate to lag far behind that of private lands in places including North Dakota and Texas.

Indeed, the IG report warns that the federal government and American Indian mineral owners "risk losing royalties" from delayed oil and gas production. "Industry officials informed us that delays cause some wells not to be drilled, resulting in additional lost production and royalties," it said.

The IG report also suggested that until recently, the Obama administration has lacked the political will to prioritize oil and gas permitting.

"Processing delays have occurred because, until recently, improving the [drilling permit] process has not been a high priority for DOI," the IG report said.

While BLM approves 99 percent of all so-called applications for permits to drill (APD) it receives, 6 percent of them are approved within 30 days of receipt, as required under a 2005 law, IG said. BLM has long argued that major time is lost waiting for industry to correct deficiencies in their APDs.

Among its major criticisms, the IG said BLM's APD permitting process is "open ended," meaning neither BLM nor the operator can predict when a permit will be approved. Nor are employees held accountable for delays, the IG said.

"BLM rarely sets and enforces target dates for completion, and consequently, the review may continue indefinitely," the report said. "At most field offices, employees conduct their work without the supervision needed to ensure timely completion."

The program is further hampered by unreliable data in BLM's official oil and gas database, the IG said.

Permitting times ranged from 37 days in BLM's Anchorage office to nearly a full year in its Buffalo, Wyo., office, but without dependable data, BLM is unable to account for the discrepancy.

But the report acknowledged that BLM -- in contrast with states -- must comply with a multitude of federal environmental laws, including the National Environmental Policy Act.

BLM's NEPA reviews of surface impacts account for most of the APD processing time, the IG said.

It also said "limited budgets" have led to understaffing of critical positions, including adjudicators, petroleum engineers, geologists and natural resource specialists, a situation that extends permitting times, particularly at offices receiving a high number of APDs.

Hiring and retaining those employees is also a challenge, in part due to the high cost of living in regions of increased oil and gas drilling -- including Durango and Silt, Colo.; Dickinson, N.D.; and Vernal, Utah.

The report recommended that BLM consider assigning field office-level project managers who could "instill accountability for all participants" and ensure that permitting problems are resolved.

It also recommended enforcing performance timelines, processing permits electronically rather than in hard copy, working with Congress to reauthorize oil and gas pilot permitting offices, conducting virtual on-site inspections and allowing industry to help fund staffing.

Kornze said BLM's oil and gas program is a top priority for his staff but that BLM is given the smallest budget and staff of any major federal land-management agency.

"The report fails to acknowledge the significant progress the BLM has made in shortening the time it takes to complete APD processing," he wrote, noting that over the past three years, average APD processing times have fallen from 307 days to 194 days even amid declining budgets.

But Kathleen Sgamma, vice president of government and public affairs at the Western Energy Alliance, said budgets matter little if BLM does not have the leadership to prioritize energy development.

"Where there's no political will to move forward and there's no accountability for meeting timelines, it's very easy for a field manager to sit back and not worry about the oil and gas program," she said. "They're not getting a lot of pressure."

Sgamma said BLM's limited staff are being stretched to meet new mandates imposed from Washington, D.C., including landscape-level mitigation planning.

Congress has reached some level of bipartisan accord on the issue.

Early last month, Sens. Tom Udall (D-N.M.) and John Barrasso (R-Wyo.) introduced a bill to extend and expand the pilot permitting office that allows BLM to use industry fees to expedite permits (E&E Daily, June 2).

The bill would also raise the per-APD fee from $6,500 to $9,500 while giving the Interior secretary greater flexibility to designate new pilot offices and to proactively allocate resources based on shifting oil and gas production trends.

The bill, which would seem to address one of the concerns of the IG, is also backed by WEA.